Quantitative Easing part II. Nothing beyond the obvious. FOMC has decided to pump in USD600bn over 8 months i.e. USD75bn per month.What Fed will do is basically purchase Treasury securities and in turn flood the market with money. This is to boost consumer sentiment, tide over unemployment, basically pick up pace of the economy.
For India, the obvious advantage is increased capital flows. The party goes on much longer! BTW, cheer on retail investors, CIL has listed at Rs100 premium! Go beserk, pop those Champagne bottles...but be a bit sanguine...CIL trades at PER of 17-18x one year foward, people may say Neyveli Lignite trades at 20x, so why not CIL? My point is, no matter what it is, commodities can not trade at teen multiples! They are commodities after all! Warren Buffet has a point when he says he stays away from commodities, its because when the cycle is down there is little you can do to offset the downfall in demand or increase in price. Anyways for now, it will all be hunky dory because there is Rs30,000cr of money waiting to be pumped in the markets. Jai Ho for some time then....
Wednesday, November 3, 2010
Wednesday, October 20, 2010
Long Break
Hi All (All? I am my only follower!)
Long break, I am in a different job profile and a different city. Joined IDBI Asset Management...yes, took that long awaited jump to the buyside! And subsequently shifted to Chennai. Chennai, closer to my home town Bangalore does offer certain advantages...5 hrs drive from Ghar...I do it quite often in my trusted Maruti Ritz (awesome vehicle!). Laid back. Commute is a cake walk...total of 20mins in a day since I stay like 2 kms away in Santhome.
Markets have gone one way since I last wrote...Nifty scaling 6000, Sensex 20,000. This after a gap of 3 yrs. I remember markets in January 2007, all time high, I was just married and still in broking. Things which are different from then:
1. Ample liquidity: Liquidity, liquidity and more liquidity! One more time...ample liquidity! Coal India IPO draws a 20x plus over subscription from QIB book! What's that? INR2000bn worth of money in the system dude! Consider this...CIL money comes back in the system, stays parked coz lots of juicy offers are around the block...Power Grid next month with INR80bn, SAIL with the same amount, IOC early next calendar with a bigger FPO than CIL! Nobody wants to miss these quality issues...hence the money will get distributed in the system, both equity and debt! Gautam...be happy man...Baalu sir too...strong yields plus robust markets...heady combo
2. Nifty is the king: Maximum run up was seen in Nifty and CNX 100. Consider this...without ANY effort, my model portfolio with lame management skills managed to deliver 5% plus absolute return per month...just on Nifty stocks! Take a bow Tata Motors (40% plus), Bajaj Auto (30% plus), Ranbaxy (I knew you would win!) and so on...
3. FMCG/Pharma, no longer defensive: When was the last time you saw ITC deliver a 11% absolute return in a month's time? Or, for that matter...Sun Pharma? Well, they did in this bull run...nothing defensive about their returns mate!
4. Absent Midcaps: No more shady circuits and continuous circuits for unheard of stocks...quality run up.
July on, the FIIs were grabbing up any kind of selling which was happening from Domestic institutions, like always...we grabbed on too late and stopped selling sometime last month. Sectors which were darlings in the initial leg were banking and auto (SBI, I Bank, BOB, Bajaj, TAMO), then came support in the form of FMCG, Pharma, oil&gas, metals, laggards were power generation, capital goods & telecom, IT and Realty were in line/neutral.
I will write in detail about each sector periodically...as and when time permits, apart from macro stuff.
Keep reading!
Disclaimer: All blog posts are made in my personal capacity and do not, in any way, reflect on IDBI Asset Management Ltd. and my position here. All views shares are entirely my own and do not reflect the views of IDBI Asset Management Ltd.
Long break, I am in a different job profile and a different city. Joined IDBI Asset Management...yes, took that long awaited jump to the buyside! And subsequently shifted to Chennai. Chennai, closer to my home town Bangalore does offer certain advantages...5 hrs drive from Ghar...I do it quite often in my trusted Maruti Ritz (awesome vehicle!). Laid back. Commute is a cake walk...total of 20mins in a day since I stay like 2 kms away in Santhome.
Markets have gone one way since I last wrote...Nifty scaling 6000, Sensex 20,000. This after a gap of 3 yrs. I remember markets in January 2007, all time high, I was just married and still in broking. Things which are different from then:
1. Ample liquidity: Liquidity, liquidity and more liquidity! One more time...ample liquidity! Coal India IPO draws a 20x plus over subscription from QIB book! What's that? INR2000bn worth of money in the system dude! Consider this...CIL money comes back in the system, stays parked coz lots of juicy offers are around the block...Power Grid next month with INR80bn, SAIL with the same amount, IOC early next calendar with a bigger FPO than CIL! Nobody wants to miss these quality issues...hence the money will get distributed in the system, both equity and debt! Gautam...be happy man...Baalu sir too...strong yields plus robust markets...heady combo
2. Nifty is the king: Maximum run up was seen in Nifty and CNX 100. Consider this...without ANY effort, my model portfolio with lame management skills managed to deliver 5% plus absolute return per month...just on Nifty stocks! Take a bow Tata Motors (40% plus), Bajaj Auto (30% plus), Ranbaxy (I knew you would win!) and so on...
3. FMCG/Pharma, no longer defensive: When was the last time you saw ITC deliver a 11% absolute return in a month's time? Or, for that matter...Sun Pharma? Well, they did in this bull run...nothing defensive about their returns mate!
4. Absent Midcaps: No more shady circuits and continuous circuits for unheard of stocks...quality run up.
July on, the FIIs were grabbing up any kind of selling which was happening from Domestic institutions, like always...we grabbed on too late and stopped selling sometime last month. Sectors which were darlings in the initial leg were banking and auto (SBI, I Bank, BOB, Bajaj, TAMO), then came support in the form of FMCG, Pharma, oil&gas, metals, laggards were power generation, capital goods & telecom, IT and Realty were in line/neutral.
I will write in detail about each sector periodically...as and when time permits, apart from macro stuff.
Keep reading!
Disclaimer: All blog posts are made in my personal capacity and do not, in any way, reflect on IDBI Asset Management Ltd. and my position here. All views shares are entirely my own and do not reflect the views of IDBI Asset Management Ltd.
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